Troubled SGI secures $70m interim funding

Beleaguered workstation vendor Silicon Graphics (SGI) announced yesterday that it has received interim approval to use a $70m financing facility provided by a group of bondholders.

The credit facility will fund day-to-day business operations including employee salaries, benefits, supplier payments and other operating expenses during the company's reorganisation process.

SGI filed for Chapter 11 bankruptcy protection earlier this week.

The Bankruptcy Court also granted approval for a number of other 'first-day' motions to support the company's employees, suppliers, customers and stakeholders. The orders enable SGI's business to continue without disruption.

Among the motions granted, SGI received approval to continue to pay employee wages and provide healthcare and other similar benefits, pay suppliers for goods and services provided after the filing, and maintain uninterrupted delivery of products and services to customers.

The company intends to make timely payment for goods and services provided on or after the filing date in the normal course of business and in accordance with the terms of existing supplier agreements.

"We are pleased with the approval of our 'first-day motions' by the Bankruptcy Court," said Dennis McKenna, chairman and chief executive at SGI.

"This approval will enable SGI to operate globally and meet normal business obligations."

SGI and its domestic US subsidiaries filed voluntary petitions for business reorganisation under Chapter 11 of the US Bankruptcy Code earlier this week.

SGI's non-US subsidiaries were not included in the filing and will continue business operations without supervision from the US courts.